plse20240331

plse20240331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34899

Pulse Biosciences, Inc.

(Exact name of registrant as specified in its charter)

Delaware	46-5696597
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3957 Point Eden Way Hayward, CA	94545
(Address of principal executive offices)	(Zip Code)

(510) 906-4600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	PLSE	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of May 2, 2024: 55,225,333

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TABLE OF CONTENTS

	PAGE No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited):	3
Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three-Month Periods Ended March 31, 2024 and 2023	4
Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2024 and 2023	5
Condensed Consolidated Statements of Stockholders’ Equity for the Three-Month Periods Ended March 31, 2024 and 2023	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures About Market Risk	24
Item 4. Controls and Procedures	24

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	25
Item 1A. Risk Factors	25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47
Item 3. Default Upon Senior Securities	47
Item 4. Mine Safety Disclosures	47
Item 5. Other Information	47
Item 6. Exhibits	47
Signatures	48

“Pulse Biosciences,” the Pulse logos and other trademarks or service marks that we use in connection with the operation of our business appearing in this annual report on Form 10-K (this "Annual Report"), including CellFX, CellFX CloudConnect, CellFX Marketplace, Nano-pulse Stimulation, nsPFA, CellFX nsPFA, and NPS, are the property of Pulse Biosciences, Inc. Solely for your convenience, some of our trademarks and trade names referred to in this Annual Report are listed without the ® and TM symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks and trade names. Also, this Annual Report may contain additional trade names, trademarks or service marks of others, which are the property of their respective owners. We do not intend our use or display of any other company’s trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any of these other companies.

Unless expressly indicated or the context requires otherwise, the terms “Pulse,” “Company,” “we,” “us,” and “our,” in this document refer to Pulse Biosciences, Inc., a Delaware corporation, and, where appropriate, its wholly owned subsidiaries.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PULSE BIOSCIENCES, INC.

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited)

	*March 31,*			*December 31,*
	*2024*			*2023*
ASSETS
Current assets:
Cash and cash equivalents	$	34,885		$	44,365
Prepaid expenses and other current assets		964			963
Total current assets		35,849			45,328

Property and equipment, net		1,400			1,528
Intangible assets, net		1,719			1,886
Goodwill		2,791			2,791
Right-of-use assets		7,040			7,256
Other assets		365			365
Total assets	$	49,164		$	59,154

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,712		$	1,836
Accrued expenses		2,268			3,814
Lease liability, current		1,101			1,058
Total current liabilities		5,081			6,708

Lease liability, less current portion		7,796			8,086
Total liabilities		12,877			14,794

Commitments and contingencies (Note 8)

Stockholders’ equity:
Preferred stock, $0.001 par value; authorized – 50,000 shares; no shares issued and outstanding		—			—
Common stock, $0.001 par value; authorized – 500,000 shares; issued and outstanding – 55,225 shares and 55,144 shares at March 31, 2024 and December 31, 2023 respectively		55			55
Additional paid-in capital		383,284			381,220
Accumulated other comprehensive income (loss)		—			—
Accumulated deficit		(347,052	)		(336,915	)
Total stockholders’ equity		36,287			44,360
Total liabilities and stockholders’ equity	$	49,164		$	59,154

See accompanying notes to the condensed consolidated financial statements.

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PULSE BIOSCIENCES, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share amounts)

(Unaudited)

	*Three Months Ended March 31,*
	*2024*			*2023*
Revenues:
Product revenues	$	—		$	—
Total revenues		—			—
Cost and expenses:
Research and development		6,741			5,829
General and administrative		3,874			3,733
Total cost and expenses		10,615			9,562
Loss from operations		(10,615	)		(9,562	)
Other income (expense):
Interest income (expense), net		478			(239	)
Total other income (expense)		478			(239	)
Loss from operations, before income taxes		(10,137	)		(9,801	)
Income tax benefit		—			—
Net loss		(10,137	)		(9,801	)
Comprehensive loss	$	(10,137	)	$	(9,801	)
Net loss per share:
Basic and diluted net loss per share	$	(0.18	)	$	(0.26	)
Weighted average shares used to compute net loss per common share — basic and diluted		55,172			37,390

See accompanying notes to the condensed consolidated financial statements.

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PULSE BIOSCIENCES, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	*Three Months Ended March 31,*
	*2024*			*2023*
Cash flows from operating activities:
Net loss	$	(10,137	)	$	(9,801	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		132			135
Amortization of intangible assets		167			167
Stock-based compensation		1,759			896
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		7			160
Other receivables		(7	)		(1	)
Right-of-use assets		216			193
Accounts payable		(124	)		587
Accrued expenses		(1,546	)		496
Deferred revenue		—			4
Lease liabilities		(247	)		(207	)
Accrued interest on related party note payable		—			801
Net cash used in operating activities		(9,780	)		(6,570	)
Cash flows from investing activities:
Purchases of property and equipment		(5	)		(39	)
Net cash used in investing activities		(5	)		(39	)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock purchase plan		296			291
Proceeds from exercises of warrants		—			194
Proceeds from exercises of stock options		9			—
Payments made on related party note		—			(917	)
Net cash provided by (used in) financing activities		305			(432	)
Net decrease in cash and cash equivalents		(9,480	)		(7,041	)
Cash and cash equivalents at beginning of period		44,365			61,139
Cash and cash equivalents at end of period	$	34,885		$	54,098

See accompanying notes to the condensed consolidated financial statements.

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PULSE BIOSCIENCES, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands)

(Unaudited)

					*Additional*		*Accumulated Other*					*Total*
	*Common Stock*				*Paid-in*		*Comprehensive*		*Accumulated*			*Stockholders’*
	*Shares*		*Amount*		*Capital*		*Loss*		*Deficit*			*Equity*
Balance, December 31, 2023		55,144	$	55	$	381,220	$	—	$	(336,915	)	$	44,360
Issuance of common stock under employee stock purchase plan		78		—		296		—		—			296
Issuance of common stock upon exercise of stock options		3		—		9		—		—			9
Stock-based compensation expense		—		—		1,759		—		—			1,759
Net loss		—		—		—		—		(10,137	)		(10,137	)
Balance, March 31, 2024		55,225	$	55	$	383,284	$	—	$	(347,052	)	$	36,287

					*Additional*		*Accumulated Other*					*Total*
	*Common Stock*				*Paid-in*		*Comprehensive*		*Accumulated*			*Stockholders’*
	*Shares*		*Amount*		*Capital*		*Loss*		*Deficit*			*(Deficit) Equity*
Balance, December 31, 2022		37,235	$	37	$	292,420	$	—	$	(294,705	)	$	(2,248	)
Issuance of shares under employee stock purchase plan		262		—		291		—		—			291
Issuance of shares upon exercise of warrants		96		—		194		—		—			194
Stock-based compensation expense		—		—		896		—		—			896
Net loss		—		—		—		—		(9,801	)		(9,801	)
Balance, March 31, 2023		37,593	$	37	$	293,801	$	—	$	(304,506	)	$	(10,668	)

See accompanying notes to the condensed consolidated financial statements.

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PULSE BIOSCIENCES, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of the Business

Pulse Biosciences, Inc. is a novel bioelectric medicine company committed to health innovation using its patented Nano-pulse Stimulation ("NPS") technology, a revolutionary energy modality that delivers nanosecond-duration pulses of electrical energy, each less than a millionth of a second long, to non-thermally clear targeted cells while sparing adjacent noncellular tissue. NPS technology, also referred to as Nanosecond Pulsed-Field Ablation ("nsPFA") technology when used to ablate cellular tissue, can be used to treat a variety of medical conditions for which an optimal solution remains unfulfilled. The Company developed its proprietary CellFX System, a novel nsPFA delivery platform, and commercialized the initial application of its nsPFA technology to treat benign lesions of the skin. In parallel, the Company has designed a variety of applicators, or end-effectors, to explore the potential use of the CellFX platform to treat disorders in other medical specialties, such as cardiology, gastroenterology, gynecology, and ear, nose and throat. These applicators include devices for open surgical procedures, endoscopic or minimally invasive procedures, and endoluminal catheters, and each has been used in preclinical studies. Based on our preclinical experience and the potential to significantly improve outcomes for patients in a large and growing market, the Company decided in 2022 to focus its primary efforts on the use of nsPFA energy and the CellFX platform in the treatment of atrial fibrillation ("AF") and in a select few other markets where it could have a profound positive impact on healthcare for both patients and providers.

The Company was incorporated in Nevada on May 19, 2014. On June 18, 2018, the Company reincorporated from the State of Nevada to the State of Delaware. The Company is located in Hayward, California. The Company maintains a website at www.pulsebiosciences.com where general information about the Company is available.

The Company’s activities are subject to significant risks and uncertainties, including the need for additional capital. The Company does not currently have any material cash flows from operations. It has had minimal revenue and currently generates no revenue and will need to raise additional capital to finance its operations. However, there can be no assurances that the Company will be able to obtain additional financing on acceptable terms and in the amounts necessary to fully fund its operating requirements.

2. Summary of Significant Accounting Policies

Going Concern

As of March 31, 2024, the Company had an accumulated deficit of $347.1 million, cash outflows from operations of $9.8 million for the three months then ended, cash and cash equivalents of $34.9 million and a net loss of $10.1 million. The Company anticipates net losses for the next several years or until it can generate substantial product revenue and achieve profitability. Based on the Company’s current operating plan, the Company has determined that, with its current financial resources, the Company would be able to operate into the first quarter of 2025. As the Company’s operating plan does not allow the Company to operate for a period of twelve months from the date the condensed consolidated financial statements are issued without additional financing, based on the Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements – Going Concern, the Company is required to disclose that substantial doubt regarding the Company’s ability to continue as a going concern exists. This evaluation initially cannot take into consideration the potential mitigating effects of plans that have not been fully implemented as of the date the financial statements are issued. To continue to fund the operations of the Company beyond this time period, management has developed a plan, which primarily consists of raising additional capital through a rights offering expected to close in the second quarter of 2024. Additionally, the Company may utilize some combination of public or private equity offerings, debt financings, or potential new collaborations in the future. There is no assurance, however, that any additional financing or any revenue-generating collaboration will be available when needed or that management of the Company will be able to obtain financing or enter into a collaboration on terms acceptable to the Company. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared on a basis consistent with the Company’s December 31, 2023 audited Consolidated Financial Statements and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. The condensed consolidated financial statements have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) and, as permitted by such rules and regulations, omit certain information and footnote disclosures necessary to present the financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The condensed consolidated balance sheet as of December 31, 2023 was derived from the audited consolidated financial statements as of that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The results of operations for the three-month period ended March 31, 2024, are not necessarily indicative of the results to be expected for the entire year or any future periods.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the financial statements of Pulse Biosciences, Inc. and its wholly-owned subsidiaries. Intercompany balances and transactions, if any, have been eliminated in consolidation.

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Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates that affect the amounts reported in the financial statements and accompanying notes to the financial statements. Estimates include, but are not limited to, the valuation and recognition of stock-based compensation, inventory valuation, warranty obligations, income taxes, and the useful lives assigned to long-lived assets. The Company evaluates its estimates and assumptions based on historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from these estimates.

Significant Accounting Policies

The Company’s significant accounting policies are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The Company continually evaluates the accounting policies and estimates used in preparing the consolidated financial statements. During both the year ended December 31, 2023, and the three-month period ended March 31, 2024, the Company issued stock options to certain employees which contain market conditions related to overall market capitalization. Additionally, the Company has issued stock options to certain employees which contain performance conditions related to certain financial measures and achievements of strategic/operational milestones.

Stock-Based Compensation

The Company's stock-based compensation programs include stock options and an employee stock purchase program.

The Company periodically issues stock options to officers, directors, employees, and consultants for services rendered. Such issuances vest and expire according to terms established at the issuance date. Stock-based payments to officers, directors and employees, including grants of employee stock options, are recognized in the financial statements based on their grant date fair values, which are estimated using the Black-Scholes option-pricing model. Stock-based compensation expense is charged to operations on a straight-line basis over the vesting period. The Company has granted stock options with both time-based as well as performance-based vesting conditions. For stock awards with performance-based vesting conditions, the Company does not recognize compensation expense until it is probable that the performance-based vesting condition will be achieved. The analysis to determine such probability involves estimates and judgements from management and the estimate of expense may be revised periodically.

The Company has also issued certain stock options with market-based vesting conditions. These vesting conditions relate to the achievement of certain market capitalization targets of the Company. The grant date fair value for these stock options was determined using a Monte Carlo simulation. The expense is recognized over the requisite service period for each tranche of the awards. The requisite service period is the service period derived from the Monte Carlo simulation model. If the market capitalization targets are met sooner than the derived service period, the Company will accelerate the recognition of stock-based compensation expense to reflect the cumulative expense associated with the vested shares. The Monte Carlo simulation requires the Company to make assumptions and judgements about the variables used in the calculation including the expected term, volatility of the Company's common stock, an assumed risk-free interest rate, and cost of equity. The assumptions used in the option-pricing model represent management’s best estimates. If factors change and different assumptions are used, the Company's stock-based compensation expense could be materially different in the future.

See Note 6 for a detailed discussion of the Company’s stock plans and stock-based compensation expense.

Product Warranty

The Company provides a standard warranty on eligible products which provides the customer assurances that the products comply with the agreed-upon specifications. The standard warranty does not provide any services in addition to those assurances. The Company accrued a warranty reserve for products sold based upon the best estimate of the nature, frequency, and costs of future claims. These estimates are inherently uncertain given the short history of sales, and changes to the historical or projected warranty experience may cause material changes to the warranty reserve in the future. In June 2023, the Company reduced the accrued warranty liability to zero. Based upon the Company's shift in focus, there are a limited number of consoles currently covered under the standard warranty. All inventory has been fully written off, therefore the only incremental costs to fulfill a warranty claim in 2024 would be shipping costs or the costs to replace the CellFX nsPFA electrode, which would be immaterial in nature.

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Warranty accrual activity consisted of the following for the three-month periods ended March 31, 2024 and 2023 (in thousands):

	*Three Months Ended March 31,*
	*2024*		*2023*
Beginning balance	$	—	$	50
Add: Accruals for warranties issued during the period		—		—
Less: Adjustment for inventory at cost and excessive and obsolete inventory		—		—
Ending balance	$	—	$	50

Net Loss per Share

The Company calculates basic net loss per share by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential dilutive common stock equivalents outstanding during the period. For purposes of this calculation, options to purchase common stock and common stock warrants are considered common stock equivalents. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted net loss per share.

Basic and diluted net loss per common share is the same for all periods presented because all warrants, stock options and restricted stock units outstanding are anti-dilutive.

The following outstanding stock options, and warrants were excluded from the computation of diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect:

	*Three Months Ended March 31,*
	*2024*		*2023*
Common stock warrants		—		7,208,193
Common stock options		10,096,411		5,608,210
Total		10,096,411		12,816,403

Recent Accounting Pronouncements Not Yet Adopted

As of March 31, 2024, there were no material changes to the information provided regarding recent accounting pronouncements in Note 2, “Summary of Significant Accounting Policies” in the Company’s Form 10-K for the fiscal year ended December 31, 2023.

3. Fair Value of Financial Instruments

The authoritative guidance with respect to fair value established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels, and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below.

Level 1 - Observable inputs such as quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include money market funds.

Level 2 - Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. The Company did not classify any of its investments within Level 2 of the fair value hierarchy.

Level 3 - Unobservable inputs for which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. The Company did not classify any of its investments within Level 3 of the fair value hierarchy.

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The following table sets forth the fair value of the Company’s financial assets measured on a recurring basis as of March 31, 2024 and December 31, 2023, respectively (in thousands):

		*March 31, 2024*
Assets	*Classification*	*Level 1*		*Level 2*		*Level 3*		*Total*
Money market funds	Cash and cash equivalents	$	32,702	$	—	$	—	$	32,702
Total assets measured at fair value		$	32,702	$	—	$	—	$	32,702

		*December 31, 2023*
Assets	*Classification*	*Level 1*		*Level 2*		*Level 3*		*Total*
Money market funds	Cash and cash equivalents	$	41,184	$	—	$	—	$	41,184
Total assets measured at fair value		$	41,184	$	—	$	—	$	41,184

The Company did not have any financial liabilities measured on a recurring basis as of March 31, 2024 or December 31, 2023.

4. Balance Sheet Components

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	*March 31,*			*December 31,*
	*2024*			*2023*
Leasehold improvements	$	2,519		$	2,519
Laboratory equipment		1,247			1,247
Furniture, fixtures and equipment		966			966
Software		272			272
Construction in progress		5			—
Total property and equipment		5,009			5,004
Less: Accumulated depreciation and amortization		(3,609	)		(3,476	)
Total property and equipment, net	$	1,400		$	1,528

Depreciation expense was $

SEC Form 10-Q filed by Pulse Biosciences Inc